CNBC - SQUAWK BOX
C-CUBE MICROSYSTEMS PRESIDENT AND CEO ALEXANDRE BALKANSKI
AUGUST 11, 1998
ABSTRACT: Balkanski says business in Asia, specifically mainland China, has been solid. He also says the whole cable industry is ripe for digital technology. Balkanski reports C-Cube shipped 11 million units in mainland China last year.
Ron: It is not often you get to invest in an Emmy award winner and now may just be the time to look at Cube Microsystems. Unit agreed to supply compression equipment for DirecTV's Los Angeles broadcast center. So is it time to tune in? On Friday, one analyst upgraded c-cube to an out perform. And its stock is trading 50% off its 52-week high. And near 52-week lows. Joining us this morning from Stanford university in California is Alexandre Balkanski, president and CEO of C-Cube. Sir, good to see you, thank you for being with us today.
Thank you, pleasure.
Ron: Can you address the stock issue first, we addressed another company in the technology business earlier today who is having similar stock price pattern as your own, can you explain why it is down?
I can't quite explain it. I think we have a terrific company. In fact, we have 2 companies in one. The market leader in digital video chips, the c-cube semiconductor, and then Digicom which is doing better all the time, which won the biggest job in the business yesterday by winning the DirecTV uplink center in Los Angeles.
Am I right to think that over half your sales go to Asia and if so, how is business there?
It used to be that over half our sales went to Asia. Far fewer now. Business has been quite solid. Most of the sales going to mainland China on an optical format called the video CD.
Is that a consumer product?
Consumer product.
And so how are the prospects for that there, how big is the market and how big could it get?
The market is the biggest consumer market in the world. We shipped 11 million units in mainland China last year, 3 years into the format so the prospects are considerable, mainland China is upgrading its infrastructure, upgrading to digital, and skipping generation going to digital.
Ron: Is video compression technology which is really transitory as we move towards digital TV or will it in fact be the backbone of that whole upgrade in the television world?
Well, you said it, it is the backbone. It is the key technology for digital television.
So anything associated with video today has been analog, historically, and is going digital tomorrow. Your viewers today are seeing CNBC over satellite, either the dish network, Echostar which uses Divicom equipment to uplink or DirecTV that will use divicom equipment tomorrow to uplink. When they are not using satellite, they are using cable and the whole cable infrastructure is ripe to upgrade to digital. It is just getting started. And there is a very major infrastructure wave that we are on top of deploying and allowing for video to move digital. At system level.
Ron: All right. Mr. Balkanski, we will leave it there. Thank you for joins us Appreciate your spending the time.
Thank you.
Ron: Alexandre Balkanski, president and CEO of C-Cube Microsystems.
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